| Summary (JC Economics Tuition Class) | |
| Equilibrium and Producer Surplus Explained | |
| Mr Koh clarified the concept of equilibrium in economics, explaining that it is the point where there is no tendency for further change. He used the example of a system currently not at equilibrium, where the price is at p.1, and the system will not stay at p.1 due to surplus, which puts downward pressure on price. The system will find a way to go back to equilibrium at the equilibrium price. Mr Koh also explained the concept of producer surplus, which is the difference between the price a producer is willing and able to sell a good for and the price they actually receive. Mr Koh also discussed the importance of understanding the key content learned in economics, including demand and supply factors, and the role of expectations in shaping these factors. He encouraged the use of examples to help recall these concepts. | |
| Understanding Price Elasticity of Demand | |
| Mr Koh discussed the factors affecting the cost of production (COP) and the price elasticity of demand (PED). He emphasized the importance of understanding the relationship between these factors and their impact on total revenue. Mr Koh also introduced the concept of elasticity, explaining it through the analogy of a hamburger. He stressed the need for detailed explanations and the ability to relate evidence to the examiners. He also highlighted the importance of understanding the relationship between price and quantity demanded. | |
| Egg Supply and Demand Dynamics | |
| Using a recent news article, Mr Koh discussed the factors affecting the supply and demand of eggs, including the depopulation of chickens and the bird flu outbreak. He emphasized the importance of understanding the relationship between the supply of eggs and the price of eggs, and how changes in the supply of chickens can impact the supply of eggs. Mr Koh also introduced the concept of derived demand, where the demand for a factor of production is derived from the quantity of the final output. He used the example of the demand for steel increasing due to an increase in car production. Mr Koh also discussed the elasticity of demand and how it can affect the price of eggs. He concluded by discussing the impact of higher egg prices on the cost of producing waffles in restaurants. | |
| Supply Curve Burden and Elasticity | |
| Mr Koh discussed the concept of the vertical distance between two supply curves, which represents the change in cost of production (COP). He explained that the change in COP is divided into the burden passed on to consumers and the burden absorbed by producers. Mr Koh also discussed how the steepness of the demand curve affects the amount of burden passed on to consumers. He used the example of cigarettes, which have a PED less than one, to illustrate how most of the tax burden is passed on to consumers. Mr Koh also touched on the concept of Price Elasticity of Supply (PES) factors, specifically for chickens and eggs, and how these factors affect the responsiveness of quantity supplied to changes in price. | |
| Income Elasticity and Product Sizes | |
| Mr Koh discussed the general rule for primary and secondary products, explaining that PED and PES for primary products tend to be smaller than one while secondary products tend to be greater than one. He also explained the concept of income elasticity, which measures the responsiveness of consumers to changes in income. | |
| Income and Demand for Goods | |
| Mr Koh discussed the relationship between income and demand for goods, specifically focusing on necessities and luxury items. He explained that as income increases, demand for necessities increases less than proportionately, while demand for luxury goods may increase more than proportionately. Mr Koh also introduced the concept of cross elasticity of demand, which measures the change in demand for one good in response to a change in the price of another good, ceteris paribus. He clarified that if two goods are substitutes, an increase in the price of one good will lead to an increase in demand for the other, and if they are complements, an increase in the price of one good will lead to a decrease in demand for the other. Mr Koh encouraged questions and set a timer for a short break. | |
| Understanding Elasticities and Price Relationships | |
| Mr Koh discussed the content of the shared folder and the importance of understanding case studies, which include extracts, paragraphs, and tables. He explained the concept of elasticities, specifically the negative value of the law of demand, and the nature of goods, such as normal and luxury goods. He also discussed the impact of price changes on total revenue, using the example of a fall in price for leisure flights to UK destinations. Mr Koh emphasized the importance of understanding the relationship between price and quantity demanded, and how this affects total revenue. He encouraged students to practice identifying these relationships and to seek help if needed. | |
| Elasticity and Revenue Analysis Techniques | |
| Mr Koh discussed the importance of understanding the relationship between changes in demand and supply and their impact on total revenue. He emphasized the need to interpret elasticity values and link them to the change in total revenue. Mr Koh also introduced a new answering technique, “OIL,” to help students remember the structure of their answers more easily. He encouraged students to practice this technique and provided feedback on their responses. | |
| Elasticity Concepts in Case Studies | |
| Mr Koh discusses strategies for answering case study questions, emphasizing the importance of working backwards and making educated guesses before reading the extract. He introduces the “ARSE” approach (Annotate, Read, Solve, Evaluate) for tackling case studies. The discussion covers elasticity concepts, including price elasticity and income elasticity of demand for different types of flights. Mr Koh also touched on the real-world relevance of elasticity concepts in pricing and output decisions for producers. | |
| Complementary Goods and Services Strategy | |
| Ending off with a real world discussion of Economic, Mr Koh discussed the concept of complementary goods and services, explaining how they are strategically placed together to encourage customers to purchase both items. He used examples such as bread and detergent, tuition centers and nail spas, and car showrooms and repair shops which rely on CED to maximise sales. Mr Koh also mentioned the successful marketing strategy of Mcdonald’s, which linked breakfast with a toy. He encouraged the participants to look around and observe these complementary goods and services in their daily lives. Mr Koh also mentioned that he would be sharing a new version of his guidebook soon, which would include a summary of these concepts. To learn more about real-world application of H2 Economics and answering techniques, reach out to us for a JC Economics tuition trial class. Sessions run throughout the week, with both onsite and Zoom classes available! | |
